777X offer puts Boeing Machinists ‘between a rock and a hard place’

Originally published December 16, 2013 at 1:22 pm

Updated December 16, 2013 at 3:31 pm

The Boeing Everett factory makes the 747, 767, 777 and 787. If Boeing builds the 777X elsewhere, 777 work would end soon after 777X starts up in 2020, and by then the 747 jumbo jet would also likely be gone, leaving most of the massive assembly plant an empty shell.

Machinists lined up in Everett last month to vote down Boeing’s 777X contract by a 2 to 1 ratio.

Boeing workers on the 777 assembly line in Everett celebrate the 1,000th Boeing 777 delivery in March 2012. While many workers want a chance to vote on the new offer, others say that Boeing is asking too much from its workforce to end pensions when Boeing executives are reaping rewards from the company’s record sales and profit.

In November, Wilson Ferguson, president of Machinists District 751 Local A, tore up a copy of the Boeing contract offer at a “Vote No” rally. Ferguson says giving up the pension is “a bridge too far.”

If the Machinists union and Boeing could agree to a contract deal, Washington state would secure decades of work fabricating the 777X airliner’s advanced wing and assembling the jet here. Yet the union is divided and in turmoil over what the company calls its best and final offer.

Two distinct, passionate arguments boiled up among the 31,000 local Machinists after their leaders Thursday rejected the revised offer.

One vocal faction, including the local leadership, is dug in, unwilling to give up its hard-won gains from the past by making concessions on pay and benefits.

Another group, including officials from the national headquarters, fears massive job losses within a decade and is ready to endorse the eight-year contract extension to ensure future work.

“People are really looking at this as a make-or-break situation,” said Adam Subitch, 27, a painter on the 777 line in Everett with nearly seven years at Boeing. “This is our livelihood we are talking about. … People are scared.”

Subitch has his first baby on the way and said that to protect his career and his nascent family’s future, he wants the opportunity to vote yes on the rejected offer.

“A lot of people are angry,” said Subitch. “A lot of us would appreciate the chance to choose our own future.”

On the other end of the age and experience spectrum is Wilson Ferguson, 58, who’s been working at Boeing almost since Subitch was born. The 26-year company veteran, who is president of the union’s Local A and works as a 737 delivery mechanic at Boeing Field, led a militant rally a month ago calling for a no vote on Boeing’s first 777X contract offer. Union members rejected that contract by 2 to 1.

Ferguson dismisses the revised offer and opposes even voting on it.

“The primary issue was the pension and that is unchanged from the first proposal,” he said. “Our membership has spoken.”

Ferguson said he’ll balk at giving up the traditional pension, even if it means that 777X is lost and Everett’s economic future evaporates.

“I believe Boeing when they say they are going elsewhere … I don’t like it, but it’s ludicrous to put that burden on the hourly workforce,” said Ferguson. “It’s just a bridge too far to ask us to give up our defined benefit-pension plan.”

What’s more, he says, Boeing doesn’t need the help.

“If the company was in any way hurting, we would consider making some concessions,” he added. “That’s just not the case. … Record profits. Record sales. Stock price is through the roof.”

Divided leadership

These two strains within the union reopened a rift between its local officials and representatives of the union’s headquarters, known as “the International”— so-called because the union has members in Canada as well as the U.S.

Local 751 district president Tom Wroblewski said he received “several hundred” emails from members by Friday morning asking him why they wouldn’t get to vote on Boeing’s final offer.

Boeing said the offer had not been withdrawn, yet Wroblewski asserted that it had been and so no vote was possible.

On Friday, to explain his rejectionist position to his members, Wroblewski issued a bitingly negative summary of the Boeing offer.

The document fed the worst conspiracy theories among the rank and file, asserting that if the company is allowed to freeze the pension, “Boeing could use our pension fund to finance the executive (pension) supplement plan.”

In contrast, the International’s lead negotiator with Boeing, Rich Michalski, spoke of the offer’s positive elements and argued that the membership needs to decide.

Frank Larkin, spokesman for the International in Washington, D.C., said that, “When there is any contract offer significantly different from a previous offer, members have the right to vote on it.”

The two elements pulling union members in opposite directions, said Larkin, are the two issues “most important to us, most dear to our hearts”: securing future work by accepting Boeing’s offer versus securing a prosperous retirement by protecting the pension.

“It’s logical there will be differences,” Larkin said.

Meanwhile, Boeing is proceeding with its nationwide site search. Its promise of more than 8,500 high-paying production jobs has drawn bids from 54 locations in 22 states.

Boeing board meets

The company’s board will discuss options in Chicago on Sunday.

If Boeing chooses somewhere else to produce the 777X’s giant composite wings and assemble the airplane, jet building in the Everett widebody plant that employs nearly 40,000 people will dramatically shrink by the end of this decade as the current 777 line winds down.

Today, nearly 20,000 Boeing employees work directly or indirectly on the 777 program, which is Boeing’s cash cow.

That work would disappear soon after the 777X starts up in 2020, and by then the 747 jumbo jet would also likely be gone, leaving most of the massive assembly plant an empty shell.

The revised Boeing proposal included several improvements on the original offer to extend the contract through 2024.

Most important, Boeing withdrew its proposal to slow the wage growth of new hires and agreed to keep what’s called “the zoom,” whereby employees shoot to the top of their pay grade at the end of six years.

On top of a $10,000 signing bonus, Boeing also added a $5,000 bonus in the middle of the contract, in 2020.

To many older Machinists, those two changes won’t matter personally. They’ll be retired by 2020.

Yet one 59-year-old, a team leader on the 777 line who asked not to be named, said he voted against the first offer because of its impact on the wages of new hires. With that issue fixed, he is ready to vote yes.

“If we get to build the wings, that’s more jobs. That’ll prevent layoffs on the 747 when they decide to wind that program down,” he said. “I’d like to see a vote.”

He said many other companies long ago ditched their traditional employee pensions and that the union needs to give up on this sole dividing issue.

Likewise, a 56-year-old quality inspector on the 787 Dreamliner line, who also asked not to be identified, said “a lot of people are upset” at not getting a chance to vote yes.

“We should decide,” he said. “If we don’t get this contract, we might not have jobs in the future. I want to retire at Boeing.”

Yet to others, the pension is sacred. Or they simply don’t trust anything Boeing management says.

Bob Baumgardner, 55, an electrician on the 787 program, supports Wroblewski’s refusal of a vote on the Boeing offer.

“Many of us were happy when the Local 751 stood up and rejected it,” Baumgardner said. “Anything that has to do with killing the pension is a solid vote no.”

Like many Machinists, Omar Abdul-Alim, a 23-year veteran mechanic in Renton, cannot accept the need for concessions when Boeing is profitable and top executives get compensation in the tens of millions.

“There’s no justice there,” said Abdul-Alim. “It’s just corporate greed.”

Jim Levitt, 61, a 35-year veteran Machinist at Boeing’s research center by Boeing Field, said that if there’s a vote, he’ll vote no, but knows many may go the other way.

“I can understand, especially with the pressure ratcheted up in the last month, that others might shift to yes,” he said.

“We are between a rock and a hard place. I don’t see a great outcome,” said Levitt. “It’s a mess.”

On Friday, Gov. Jay Inslee and several other elected officials urged the union to let the members vote on Boeing’s revised offer.